THE local strip retail market has gone through an evolution over the past 10 years, and Oxford Street in Paddington has been a part of that change, according to Ray White’s latest Between the Lines* report.
Ray White Commercial Eastern Suburbs Director Grant Whiteman said destination strips like Oxford Street have had to reposition.
“This is off the back of local development, e-commerce, demographics, and spending habits, which have all changed the way individuals interact with local shopping,” Mr Whiteman said.
“While tenant mixes have seen some movement, rental rates and vacancies do continue to fluctuate.
“However, enquiry levels remain elevated for investment, with yields achievable in the 5-5.5 per cent range.”
Ray White Head of Research Vanessa Rader said Ray White Commercial Eastern Suburbs had surveyed the Oxford Street retail strip in January 2019 to determine tenancy mix and vacancies.
“Results have been encouraging, with vacancies of approximately 8.85 per cent recorded. Our last survey conducted in early 2015 saw vacancies at 11.81 per cent,” Ms Rader said.
“This period in 2015 was difficult for the region given the vacation of larger multinational tenants and the uncertain identity for this area.
“Oxford Street enjoys high foot traffic and a heavy reliance on the clothing and soft good sector.
“Known as a fashion strip, this location also had a strong weighting towards furniture and homeware retailing to cater for the fashion-conscious home owner, however this has reduced over the last few years to just 2.46 per cent of the strip.
“While other retail locations favour food retailing, Oxford Street only represents 13.92 per cent of combined specialised food, café and restaurant retailing.
“Many retail centres and strip locations have favoured food retailing, and given the increase in retail spending habits geared towards food, this segment is somewhat immune to the internet shopping phenomenon that has changed the face of retail over the last ten years.
“While this may be below rates achieved in other locations, this has shown a swift upward movement since our last survey, where this accounted for less than 10 per cent of the total floorspace.
“While some owners have invested into capital expenditure and repurposing spaces, others have not, which results in a range of quality in tenants, with rental rates in a wide range between $350 to $900/sq m gross.
“This is down from the prime range of $900 to $1,500/sq m achieved in our 2015 analysis, and the highs of pre-Westfield Bondi Junction, upwards of $1,200/sq m.”
*Ray White Between the Lines – Retail Survey: Oxford Street, Paddington – March 2019.